Tytus Co. entered into the following transactions involving short-term liabilities in 2010 and 2011.

Tytus Co. entered into the following transactions involving short-term liabilities in 2010 and 2011.

  

2010
Apr. 20	Purchased $38,500 of merchandise on credit from Frier, terms are 1/10, n/30. Tytus uses the perpetual inventory system.
May 19	Replaced the April 20 account payable to Frier with a 90-day, $30,000 note bearing 7% annual interest along with paying $8,500 in cash.
July 8	Borrowed $63,000 cash from Community Bank by signing a 120-day, 10% interest-bearing note with a face value of $63,000.
__?__	Paid the amount due on the note to Frier at the maturity date.
__?__	Paid the amount due on the note to Community Bank at the maturity date.
Nov. 28	Borrowed $33,000 cash from UMB Bank by signing a 60-day, 9% interest-bearing note with a face value of $33,000.
Dec. 31	Recorded an adjusting entry for accrued interest on the note to UMB Bank.

  

2011

__?__

Paid the amount due on the note to UMB Bank at the maturity date.

Required:
1.	Determine the maturity date for each of the three notes described.

	Frier	Com. Bank	UMB
Maturity date	Aug. 17	Nov. 5	Jan. 27

Explanation:

Maturity dates

		Frier	Com. Bank	UMB
Date of the note		May 19	July 8	Nov. 28
Term of the note (in days)		90	120	60
Maturity date		Aug. 17	Nov. 5	Jan. 27
2.	Determine the interest due at maturity for each of the three notes. (Use 360 days a year. Do not round your intermediate calculations. Omit the "$" sign in your response.)

	Frier	Com. Bank	UMB
Interest due at maturity	$	$	$

Explanation:

Interest due at maturity

  

		Frier			Com. Bank				UMB
Principal of the note		$	30,000		$	63,000			$	33,000
Annual interest rate			7	%		10		%		9	%
Fraction of year			90/360			120/360				60/360
Interest expense		$	525		$	2,100			$	495
3.	Determine the interest expense to be recorded in the adjusting entry at the end of 2010. (Enter 0 if no interest is to be accrued. Use 360 days a year. Do not round your intermediate calculations. Round your final answers to 2 decimal places. Omit the "$" sign in your response.)

  

	Frier	Com Bank	UMB	Total
Accrued interest expense	$	$	$	$

Explanation:

Accrued interest on UMB note at the end of 2010

   

Total interest for note	$	495
Fraction of term in 2010		33/60
Accrued interest expense	$	272.25

4.	Determine the interest expense to be accrued on 12/31 for the UMB Bank note. (Use 360 days a year. Do not round your intermediate calculations. Round your answer to 2 decimal places. Omit the "$" sign in your response.)

     

Interest expense in 2011

$

rev: 09_25_2012

Explanation:

Interest on UMB note in 2011

     

Total interest for note	$	495
Fraction of term in 2011		27/60
Interest expense in 2011	$	222.75

5.	Prepare journal entries for all the preceding transactions and events for years 2010 and 2011. (Use 360 days a year. Do not round your intermediate calculations. Omit the "$" sign in your response.)

  

2010

  

Date	General Journal	Debit	Credit
Apr. 20	Merchandise inventory
	Accounts payable-Frier
May 19	Accounts payable-Frier
	Cash
	Notes payable-Frier
July  8	Cash
	Notes payable-Community
Aug. 17	Interest expense
	Notes payable-Frier
	Cash
Nov. 5	Interest expense
	Notes payable-Community
	Cash
Nov. 28	Cash
	Notes payable-UMB bank
Dec. 31	Interest expense
	Interest payable

2011

  

Date	General Journal	Debit	Credit
Jan. 27	Interest expense
	Notes payable-UMB bank
	Interest payable
	Cash

Explanation:

May 19, 2010

Paid $8,500 cash and gave a 90-day, 7% note to extend due date on account.

July 8, 2010

Borrowed cash with a 120-day, 10% note.

Nov. 28, 2010

Borrowed cash with 60-day, 9% note.

On January 8, the end of the first weekly pay period of the year, Royal Company's payroll register

On January 8, the end of the first weekly pay period of the year, Royal Company's payroll register showed that its employees earned $24,760 of office salaries and $60,840 of sales salaries. Withholdings from the employees' salaries include FICA Social Security taxes at the rate of 6.20%, FICA Medicare taxes at the rate of 1.45%, $13,260 of federal income taxes, $1,450 of medical insurance deductions, and $820 of union dues. No employee earned more than $7,000 in this first period.

  

Required:
1.1	Calculate FICA Social Security taxes payable and FICA Medicare taxes payable by the employees of Royal Company. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

  

FICA—Social sec. taxes payable	$
FICA—Medicare taxes payable	$

  

1.2	Prepare the journal entry to record Royal Company's January 8 (employee) payroll expenses and liabilities. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

  

Date	General Journal	Debit	Credit
Jan. 8	Office salaries expense
	Sales salaries expense
	FICA-Social sec. taxes payable
	FICA-Medicare taxes payable
	Employee fed. inc. taxes payable
	Employee medical insurance payable
	Employee union dues payable
	Salaries payable

  

2.

Prepare the journal entry to record Royal's (employer) payroll taxes resulting from the January 8 payroll. Royal's merit rating reduces its state unemployment tax rate to 5% of the first $7,000 paid each employee. The federal unemployment tax rate is 0.8%. (Round your answers to 2 decimal places. Omit the "$" sign in your response.)

Date	General Journal	Debit	Credit
Jan. 8	Payroll taxes expense
	FICA-Social sec. taxes payable
	FICA-Medicare taxes payable
	State unemployment taxes payable
	Federal unemployment taxes payable

Explanation:

1.2

To record payroll for period.

FICA—Social sec. taxes payable = $85,600 × 6.2% = $5,307.20

FICA—Medicare taxes payable = $85,600 × 1.45% = $1,241.20

  

2

To record employer payroll taxes.

State unemployment taxes payable = $85,600 × 0.05 = $4,280.00

Federal unemployment taxes payable = $85,600 × 0.008 = $684.80